More to Come from Top-Performer India?

As a major oil importer, India's economy is expected to benefit from falling commodity prices. This is pulling down inflation which may prompt the Indian central bank to cut interest rates

Patricia Oey 11 November, 2014 | 9:25AM
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India has been one of the best-performing markets in 2014 on both domestic and international investors' optimism that the new prime minister is going to foster more business-friendly reforms. The MSCI India Index is up about 25%, while the Morningstar India Equity category is a whopping 45% higher year-to-date. So, it may seem right now is not the best time to invest in India, but there is a catalyst that may help sustain the current rally—and that is falling oil prices.

Historically, India has had a hard time. The country pays out a considerable amount of fuel subsidies to citizens, and government has had a hard time cutting these subsidies. These subsidies have weighed on the fiscal deficit, they've hindered the country's ability to invest in infrastructure, and they’ve also impacted the country's credit ratings. But with falling oil prices, the prime minister saw an opportunity to cut the fuel subsidy at a time when it wouldn’t have such a large impact on the end consumer.

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The information contained within is for educational and informational purposes ONLY. It is not intended nor should it be considered an invitation or inducement to buy or sell a security or securities noted within nor should it be viewed as a communication intended to persuade or incite you to buy or sell security or securities noted within. Any commentary provided is the opinion of the author and should not be considered a personalised recommendation. The information contained within should not be a person's sole basis for making an investment decision. Please contact your financial professional before making an investment decision.

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Securities Mentioned in Article

Security NamePriceChange (%)Morningstar
Rating
Comgest Growth India EUR R Acc47.45 EUR-0.39Rating
Fidelity India Focus A-GBP8.66 GBP-0.86Rating
Franklin India A(acc)USD49.03 USD-1.33Rating
JPMorgan Indian Ord758.01 GBP-0.39Rating
Xtrackers MSCI India Swap ETF 1C GBP1,097.21 GBP-1.37Rating

About Author

Patricia Oey  Patricia Oey is an ETF analyst at Morningstar.

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